BILL NUMBER: SB 1022	CHAPTERED  09/02/99

	CHAPTER   309
	FILED WITH SECRETARY OF STATE   SEPTEMBER 2, 1999
	APPROVED BY GOVERNOR   SEPTEMBER 1, 1999
	PASSED THE SENATE   AUGUST 19, 1999
	PASSED THE ASSEMBLY   JULY 15, 1999
	AMENDED IN ASSEMBLY   JUNE 28, 1999
	AMENDED IN SENATE   APRIL 28, 1999

INTRODUCED BY   Senator Johnston

                        FEBRUARY 26, 1999

   An act to amend Sections 661 and 1861.16 of the Insurance Code,
relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1022, Johnston.  Automobile insurance:  good driver discount:
representative of insurer.
   (1) Existing law requires agents or representatives representing
insurers under common ownership, management, or control to provide
good driver coverage, which is required to be sold to eligible
persons pursuant to certain provisions enacted by Proposition 103, at
the lowest rates applicable within the common ownership, management,
or control group.
   This bill would define the term "representative" for purposes of
this provision of law.  Because this bill would clarify the persons
required to provide good driver coverage required under Proposition
103, it would amend Proposition 103, and thus, would require a 2/3
vote for enactment.
   (2) Existing law, Proposition 103, specifies that a notice of
cancellation of a policy of automobile insurance may be based, among
other reasons, on a substantial increase in the hazard insured
against.  Existing provisions of law relative to automobile insurance
that are separate from, and not enacted in furtherance of,
Proposition 103, specify that a notice of cancellation of a policy of
automobile insurance is effective only if it is based on one or more
specified reasons, but do not specify as a reason a substantial
increase in the hazard insured against.
   This bill would add to these separate provisions of law that a
substantial increase in the hazard insured against is a reason for a
notice of cancellation.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 661 of the Insurance Code is amended to read:
   661.  (a) A notice of cancellation of a policy shall be effective
only if it is based on one or more of the following reasons:
   (1) Nonpayment of premium.
   (2) The driver's license or motor vehicle registration of the
named insured or of any other operator who either resides in the same
household or customarily operates an automobile insured under the
policy has been under suspension or revocation during the policy
period or, if the policy is a renewal, during its policy period or
the 180 days immediately preceding its effective date.
   (3) Discovery of fraud by the named insured in pursuing a claim
under the policy provided the insurer does not rescind the policy.
   (4) Discovery of material misrepresentation of any of the
following information concerning the named insured or any resident of
the same household who customarily operates an automobile insured
under the policy:
   (A) Safety record.
   (B) Annual miles driven in prior years.
   (C) Number of years of driving experience.
   (D) Record of prior automobile insurance claims, if any.
   (E) Any other factor found by the commissioner to have a
substantial relationship to the risk of loss.
   Any insured who negligently misrepresents information described in
this paragraph may avoid cancellation by furnishing corrected
information to the insurer within 20 days after receiving notice of
cancellation and agreeing to pay any difference in premium for the
policy period in which the information remained undisclosed.
   (5) A substantial increase in the hazard insured against.
   (b) This section shall not apply to any policy or coverage that
has been in effect less than 60 days at the time notice of
cancellation is mailed or delivered by the insurer unless it is a
renewal policy.
   (c) Modification of automobile physical damage coverage by the
inclusion of a deductible not exceeding one hundred dollars ($100)
shall not be deemed a cancellation of the coverage or of the policy.

   (d) This section shall not apply to nonrenewal.
  SEC. 2.  Section 1861.16 of the Insurance Code is amended to read:

   1861.16.  (a) An insurer issuing a policy described in subdivision
(a) of Section 660 by or through an insurance agent where a
commission is paid, directly or indirectly, to that agent shall, when
issuing a policy in the minimum financial responsibility coverage
amount as required by Section 1861.15, pay a commission on the same
terms and on the same percentage basis to that agent as for any
higher amount of policy coverage sold by that agent.  In no case
shall the percentage amount of commission paid to that agent for a
policy of minimum financial responsibility coverage be less than the
percentage commission paid to that agent on any higher level of
policy coverage issued by that insurer.
   (b) An agent or representative representing one or more insurers
having common ownership or operating in California under common
management or control shall offer, and the insurer shall sell, a good
driver discount policy to a good driver from an insurer within that
common ownership, management, or control group, which offers the
lowest rates for that coverage.  This requirement applies
notwithstanding the underwriting guidelines of any of those insurers
or the underwriting guidelines of the common ownership, management,
or control group.  Nothing in this subdivision shall require an
insurer to offer and sell a good driver discount policy that the
insurer would otherwise not be required to offer and sell in
accordance with paragraph (3) of subdivision (b) of Section 1861.02.
As used in this subdivision, "representative" means any person who
offers or prepares premium quotations on behalf of either an insurer
or any entity acting directly or indirectly on behalf of an insurer.
This subdivision shall not be construed to either permit a
representative to transact insurance, or to exempt a representative
who does transact insurance from the licensing provisions of this
code.
   This subdivision shall become operative on January 1, 1991.
   (c) An insurer that is required by this section or Section 1861.02
to offer and sell good driver discount policies to good drivers to
whom it did not sell those policies prior to November 8, 1988, due to
driving safety record or vehicle type may file and, upon the
approval of the commissioner, implement an interim rating plan for
those applicants until the rating plan required by subdivision (a) of
Section 1861.02 is adopted, provided that the insurer has timely
filed an automobile insurance rating plan in compliance with
subdivision (a) of Section 1861.02, and that plan has not been
approved.  An insurer may file an interim plan prior to the operative
date of subdivision (b).
   The commissioner shall notify the public of any application by an
insurer for an interim rating plan.  The public notice shall meet the
requirements of Section 1861.06.  The application shall be deemed
approved 60 days after public notice unless (1) a consumer or his or
her representative requests a hearing within 45 days of public notice
and the commissioner grants the hearing, or determines not to grant
the hearing and issues written findings in support of that decision,
or (2) the commissioner on his or her own motion determines to hold a
hearing.  If the commissioner grants a request for a hearing or
determines on his or her own motion to hold a hearing on the
application for an interim rating plan, but does not approve or
disapprove the proposed interim rating plan within the later of 30
days from the date the commissioner grants a request or determines to
hold the hearing or January 1, 1991, the interim rating plan may be
used until the time that the commissioner issues a decision.
   If an interim rate or proposed interim rate is greater than the
rate ultimately approved, the insurer shall refund to its applicable
policyholders, in proportion to the amount of premium paid by each,
the difference between the total amount earned and the amount to
which the insurer is entitled under the rate ultimately approved,
together with interest at the rate of 10 percent per year.  In lieu
of a refund, the insurer may provide a credit to the policyholder if
the amount due is less than three dollars ($3).
   (d) Nothing contained in subdivision (b) or (c) shall be construed
to expand, limit, or modify the requirements of subdivision (b) of
Section 1861.02.
   (e) A violation of this section by any insurer shall subject it to
the penalties provided by Section 1861.14.
  SEC. 3.  The Legislature finds and declares that Section 2 of this
act furthers the purpose of Proposition 103 by clarifying the persons
required to provide good driver coverage required under Proposition
103.
